Political connections and stock price crash risk: evidence of institutional investors’ heterogeneous monitoring

• Chwee Ming Tee ^[1]
  1. [1] Monash University

     Monash University

     Australia

     
• Localización: Revista española de financiación y contabilidad, ISSN 0210-2412, Vol. 48, Nº 1, 2019, págs. 50-67
• Idioma: inglés
• Títulos paralelos:
  • Conexiones políticas y riesgo de caída de los precios de las acciones: evidencia de la supervisión heterogénea de los inversores institucionales
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• Resumen
  • español

    Este estudio examina la efectividad del monitoreo de diferentes tipos de inversionistas institucionales en la asociación entre firmas políticamente conectadas (PCF) y el riesgo de colisión de precios de acciones. Usando una muestra de empresas malasias de 2002 a 2012, el estudio encuentra que los PCF están asociados positivamente con el riesgo de caída de los precios de las acciones, en consonancia con la teoría del capitalismo de amigos y el clientelismo político. Sin embargo, un control efectivo por parte de los inversores institucionales atenúa el riesgo de colisión en los PCF. Finalmente, los hallazgos revelan que solo el monitoreo realizado por inversores institucionales resistentes a la presión puede aliviar el riesgo de fallas en los precios de las acciones de PCF. Esto concuerda con la teoría de la relación comercial, y sugiere que los inversores institucionales no deberían verse como un grupo homogéneo

  • English

    This study examines the monitoring effectiveness of different types of institutional investors on the association between politically connected firms (PCFs) and stock price crash risk. Using a sample of Malaysian firms from 2002–2012, the study finds that PCFs are positively associated with stock price crash risk, consistent with the theory of crony capitalism and political patronage. However, effective monitoring by institutional investors attenuates crash risk in PCFs. Finally, the findings reveal that only monitoring by pressure-resistant institutional investors can alleviate the risk of crashes in PCF’s stock prices. This concurs with the theory of business relationship, and suggests that institutional investors should not be seen as a homogeneous group.

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